Follow the dollar exchange rate and the Stock Exchange session today – 12/18/2023 – Market

The dollar opened the day close to stability this Monday (18), with the market evaluating the approval of the tax reform in Congress, last Friday (15), and awaiting new inflation data from the United States this week.

At 9:10 am, the spot dollar advanced 0.06%, quoted at R$4.9409. On Friday, before the approval of the tax reform, the currency advanced 0.45% and ended the day at R$4.937.

The Stock Exchange fell 0.49%, to 130,197 points, in a common correction movement, after having recorded its highest level in history on Thursday (14).

According to Levante Corp’s chief analyst, Eduardo Rahal, the market exhibited a “sideways trend” this Friday, after a week marked by intense volatility, which highlighted interest rate decisions in Brazil and the USA.

He mentioned that, since Wednesday, investors began to recalculate their expectations for future changes in interest rates by the North American central bank, anticipating the chance of cuts, with some betting as early as January 2024.

On Wednesday, the Fed (Federal Reserve, the US Central Bank) confirmed market expectations and maintained interest rates between 5.25% and 5.50% per year, while 17 of the Fed’s 19 monetary policy makers began to project rate cut in 2024.

Furthermore, Fed Chairman Jerome Powell stated that the US Federal Reserve is probably done raising interest rates and stated that they are very focused on not making the mistake of keeping rates high for too long.

Abroad, the dollar index against a basket of strong pairs also recovered from recent lows, rising 0.63%.

The rise in the dollar could also be a reflection of seasonal demand for the US currency, traders said, as the end of the year approaches and Brazilian companies prepare to send money remittances abroad, which could harm the real in the final stretch of 2023.

“The real tends to have seasonal headwinds towards the end of the year, but this may not be enough [para derrubar a moeda]given the strong fundamentals, such as ‘carry’, and a consistent orientation from Copom towards a easing cycle [de juros] cautious,” Citi said in a report to clients.

_{With information from Reuters}